Question: Problem 4 (continued) B. A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity

Problem 4 (continued) B. A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years

Problem 4 (continued) B. A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%. i) Find the price of the bond at 8% YTM and also if its YTM falls to 7%. ii) What price would be predicted by the duration method if the YTM falls to 7%? iii) What price would be predicted by the duration-with-convexity method if YTM falls to 7%

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